The first eight LCAs are expected to enter service next year. When work began in the mid-1980s, it was believed that the aircraft would be ready for flight testing by 1990. A long list of technical delays resulted in that first flight taking place in 2001. Corners had to be cut to make this happen, for the LCA was originally designed to use the Indian built Kaveri engine. For a jet fighter, the engine is the most complex part of the aircraft, and the Kaveri has had its share of setbacks. Fortunately, there was an American engine, the GE 404, that fit the LCA, and could be used as a stop-gap. The Kaveri engine is not expected to be ready until 2011, or so. The American engine will be used in the meantime.
For all this, India only plans to buy 200-300 LCAs, mainly to replace its aging MiG-21s. Export prospects are dim, given all the competition out there (especially for cheap, second-hand F-16s). The delays have led the air force to look around for a hundred or so new aircraft (or even used F-16s) to fill the gap between elderly MiG-21s falling apart, and the arrival of the new LCAs.
However, two decades down the road, the replacement for the LCA will probably be a more competitive, and timely, aircraft.
For two decades, India has been trying to design, develop and manufacture its own "lightweight fighter." India calls it the LCA (Light Combat Aircraft), and the project has been a major disaster. The U.S. F-16 is probably the premier "lightweight fighter" in service, and entered wide service about the time India began thinking about creating their own. Both the F-16 (at least the earlier models), and the LCA, weigh about twelve tons. But the F-16 is a high performance aircraft, with a proven combat record, while the LCA is sort of an improved Mirage/MiG-21 type aircraft. Not too shabby, and cheap (about half the cost of an F-16). Also, for all this time, money and grief, India makes its aviation industry a bit more capable and mature.